US Congress Subcommittee Urges Cancellation of China’s Most-Favored-Nation Treatment.

The US-China Economic and Security Review Commission (USCC) released its annual report for 2024, suggesting that revoking the Most Favored Nation (MFN) status granted to China by the United States in 2000 could bring about a change in the Chinese Communist Party’s unfair trade practices.

This marks the first time a specific call to terminate the relevant legislation has been made by a specially established institution within the United States Congress. Over the past two decades, this U.S. legislation has played a fundamental role in China’s economic development.

Established in October 2000 by Congress, the USCC is an independent institution tasked with reporting to Congress on the impact of U.S.-China trade and economic relations on national security.

In its nearly 800-page report released on Tuesday, the USCC stated that the MFN status, also known as Permanent Normal Trade Relations (PNTR), “enables China to benefit from the same trade terms as U.S. allies, despite China (the CCP) engaging in behaviors such as intellectual property theft and market manipulation.”

The committee asserted that discontinuing this status would give the U.S. more leverage in addressing the CCP’s unfair trade practices.

Revoking the status could result in higher tariffs on a large number of Chinese products by the U.S. and potentially trigger an annual review of China’s trade behaviors, similar to the process before MFN status was granted.

Currently, it is primarily Republican members of Congress who are advocating for this stance.

In 2000, Congress approved granting China MFN status with Beijing promising to open up its market and achieve trade liberalization before joining the World Trade Organization.

According to World Trade Organization rules, the U.S. can cite national security exceptions to revoke trade terms granted to a foreign country.

In February 2022, following Russia’s invasion of Ukraine, the Biden administration imposed similar sanctions on Russia.

The report released on Tuesday was based on input from 59 experts from government, business, and research organizations over the past year and six hearings. Twelve of the commission members are not members of Congress but are appointed by Congress.

One of the USCC commissioners, Jacob Helberg, said, “Fairly speaking, China (the CCP) may never fulfill its WTO commitments.”

Helberg believes that increasing tariffs on Chinese manufactured goods will accelerate the reshoring of U.S. supply chains.

Last week, John Moolenaar, Chairman of the House China Caucus and Republican Congressman from Michigan, introduced a bill to revoke the longstanding trade relationship with China, citing U.S. Trade Representative Tai’s belief that Beijing is still practicing “state-led non-market economy.”

Some Republican senators, including Tom Cotton from Arkansas, Marco Rubio from Florida (who is currently a nominee for Secretary of State under the Trump administration), and Robert Lighthizer, the U.S. Trade Representative during Trump’s first term, have all advocated for the revocation of China’s MFN status.

However, some Republicans are hesitant about the repeal, fearing retaliation from the CCP and potential price increases due to tariffs.